Israel eyes LNG tender to diversify energy supply

TEL AVIV, June 5 Israel will likely publish its
first tender for construction of a liquefied natural gas (LNG)
terminal by the end of 2007 to diversify its energy sources,
National Infrastructure Minister Binyamin Ben-Eliezer said.

Ben-Eliezer said on Tuesday the tender would be for the
building of a $500 million LNG facility and the location would
be determined soon.

"We are looking to publish the tender for LNG by the end of
the year," he told Reuters on the sidelines of a United
Nations-sponsored economic conference.

An LNG facility "would allow Israel to import liquefied
natural gas from all over the world," Ben-Eliezer said.

An aide to Ben-Eliezer said the tender could reach as much
as $5 billion if it were combined with the purchase of the gas.
He added that a feasibility study was in its final stages and
that eight locations on Israel's Mediterranean coast were being
looked at to build the facility.

The minister said the project, like most other recent
infrastructure undertakings in Israel in recent years, will be a
state initiative but funded by the private sector.

He said Israel needed to secure energy from a number of
sources in case of a further rise in fuel prices or should
global supplies of fossil fuels start to run out.

ACUTE NEED

"The need to secure a supply of energy is even more acute
for Israel, for the most part due to Israel's problematic
geopolitical location on the one hand and the fact that the
lion's share of the world's energy sources lie in the Arab
world," Ben-Eliezer said at the conference.

Israel was also in talks with Turkey to create an
"infrastructure corridor", a project of about $3 billion, where
Israel would import fuel and water through a pipeline from
Turkey's Ceyhan port.

"The planned infrastructure corridor between our two
countries would include pipelines for the transport of natural
gas, oil, water and possibly even electricity," he said, noting
Turkey was important to Israel from both a political and energy
perspective.

Israel and Turkey recently signed a memorandum of
understanding to see the project through. The first step will be
to carry out a feasibility study to determine the technical and
economic aspects of the project.

Ben-Eliezer said he was in the process of obtaining part of
the financing for the project from the European Investment Bank.

"The final implementation of the infrastructure corridor
will assure Israel continuous supply of energy and water, as
well as creating a potential for export to the Far East," he
said.

Egypt will be a secondary supplier to a U.S.-Israeli group
that is developing natural gas off Israel's southern
Mediterranean coast.

Ben-Eliezer said Israel was in talks with Russian gas
company Gazprom (GAZP.MM) for the import of gas and the Israeli
government continues to negotiate with British Gas (BG.L) to tap
into a natural field BG discovered off the Gaza Strip.